The Pantry Completes Final Prep for Couche-Tard Merger

CARY, N.C. — The Pantry Inc. is undergoing the final steps to complete its pending acquisition by Laval, Quebec-based Alimentation Couche-Tard Inc., parent to Circle K stores in the United States.

On Jan. 12, The Pantry filed a preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with a special meeting of its shareholders to seek approval and adoption of the merger agreement.

Assuming shareholders approve the deal, which was first announced Dec. 18, final regulatory government approvals must also be granted. The merger is expected to close in the first half of this year, according to a Wells Fargo Securities LLC research note issued Thursday.

In the meantime, the parent to Kangaroo Express stores on Thursday reported financial results for its 2015 fiscal first quarter ended Dec. 25. The convenience store retailer earned net income of $18.9 million in its most recent quarter, compared to a loss of $5.1 million during the same quarter one year prior.

Comparable store merchandise revenues increased 3.6 percent year over year, while merchandise gross margins improved slightly to 33.8 percent.

Comparable store retail fuel gallons sold increased 3.7 percent in The Pantry's latest quarter. Margins per gallon saw a strong increase of more than 6 cents per gallon year over year to 18.2 cents per gallon.

"Our strong first quarter results reflect continuing progress as we grew merchandise and fuel gross profit while controlling expenses," said Dennis G. Hatchell, president and CEO of The Pantry. "Improved merchandising effectiveness drove a 3.6-percent increase in comparable store merchandise sales, and a 5-percent increase in sales per customer. Fuel gross profit and comparable store fuel volumes improved significantly as we benefited from our focus on fuel price management and a continued decline in fuel costs. Our team is focused on addressing transition matters under the merger agreement we reached in late December with Alimentation Couche-Tard Inc."

Due to the impending merger, The Pantry did not host a quarterly conference call to discuss its results.

As of Thursday, Cary-based The Pantry Inc. operated 1,509 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.